New Zealand cleaning industry operators are relying on smart manufacturing, inventory and product strategies to succeed as global forces continue to disrupt the cleaning consumables space, writes Cameron Cooper.
The Ukraine-Russia conflict is the latest challenge that is putting pricing pressure on cleaning consumables in the New Zealand market.
With many consumables – such as buckets and brushware through to dispenser bottles and chemical containers – using petroleum-based plastics for their manufacture or packaging, the disruption to oil supplies coming out of sanction-hit Russia is having serious flow-on effects for the price of goods.
“The cost of products has gone up,” says Ebin Sebastian, managing director of NZ Cleaning Supplies.
With supply-chain bottlenecks and shipping container shortages out of the United States and Europe also affecting freight charges, Sebastian estimates wholesale prices for a range of his business’s products will increase by 5 per cent to 12 per cent.
“But we’re not sitting here and doing nothing about it,” he says.
“We’re negotiating as much as we can with the manufacturers. They understand that they have to sell their products at the right price, otherwise it won’t be good for anyone in the industry.”
The goal is to prevent or minimise any price hikes for customers down the supply chain.
For NZ Cleaning Supplies, one of its secret weapons is a large warehouse in Ellerslie that enables it to fine-tune inventory control and partially evade being at the mercy of freight cost spikes.
“We have the storage space we need,” Sebastian says. “And we’re constantly monitoring stock each day and talking to our customers.”
As COVID-19 lingers, the demand for sophisticated cleaning chemicals shows no signs of abating in the New Zealand market.
Greg Whiteley, executive chairman of Whiteley, says an ongoing emphasis on hygiene in business, industrial and healthcare facilities during the pandemic is driving demand for its medical infection prevention and professional hygiene solutions.
“Even though we now know that this virus is primarily spread via respiratory means, there’s still a finite risk of transmission via inanimate surfaces,” he says. “Therefore, risk profiling still has relevance.”
Despite acknowledging international supply-chain and manufacturing issues, Dr Whiteley says that relatively slow regulatory approvals of some high-quality hygiene and chemical products in the New Zealand market has at times been frustrating.
Medsafe is the government authority in New Zealand that is responsible for the regulation of therapeutic products in the country.
“If we could sell more, we would,” Dr Whiteley says.
“But that’s a regulatory issue beyond our control.”
Even if the pandemic peters out, he says New Zealand and other markets should still focus on hand-hygiene products that will be crucial in the ongoing fight against superbugs that are spread by touch and contact.
“Hand hygiene will remain just as important as your surface hygiene. What you touch needs to be cleaned, and what you’ve touched it with needs to be cleaned.”
Dr Whiteley says some consumers have become dissatisfied with “cheap, crappy” hand-hygiene products that have caused skin irritations.
“So many businesses pivoted into hand-hygiene products, but it’s deceptively complicated to get the formula right for these products. Most of the products were absolute rubbish, so people ended up with terrible skin issues.”
In the carpet cleaning sector, demand for greener chemicals is steadily growing, according to Sean Johnson, president of the Carpet Cleaners Association of New Zealand and director of Restore Cleaning & Restoration.
“More people are definitely asking for eco-friendly products,” he says.
“There’s been a real improvement in the quality of greener chemicals, and companies are realising that they have to get on board.”
Johnson says many of the harsh chemicals used in the past on carpets are no longer acceptable.
He notes, though, that higher-quality and more environmentally friendly products often come at a higher cost and have to be factored into contracts.
“There is a cost involved, but more people simply don’t want to use toxic chemicals.”
Government mandates for items such as masks and sales of greener chemicals have contributed to “phenomenal growth” of about 27 per cent for cleaning products business RapidClean NZ in the past financial year.
National manager Geoff Hughes says the owner-operated businesses in the group have revamped their range of chemicals, including adding more products with accreditation from Environmental Choice New Zealand. Members have also maintained supplies of in-demand products such as hand sanitisers, gloves and masks.
While supply-chain disruptions have been an issue, RapidClean NZ has put in place measures to combat such problems.
For example, it has forged strong relationships with three preferred suppliers for chemicals and five suppliers for sanitisers.
“We may have to pay a little more at the moment to get things such as disinfectants and surface sanitisers and hand sanitisers, but there are more than enough options in this country for our members to be able to source and supply their customers,” Hughes says.
As to how RapidClean members have performed well in tough and uncertain markets in which freight costs have soared, Hughes says communication with all players in the supply chain – and especially customers – has been the key.
“The supply issues have been reasonably well publicised in the media,” he says.
“But it’s collectively taken a lot of work by our members and their staff to communicate with their customers and to help them understand some of the difficulties. Because of that work, the market is reasonably appreciative of the issues.”
Sebastian says NZ Cleaning Supplies has noticed that more and more people are abandoning masks and rapid antigen test (RAT) kits – both big sellers in the past 12 months – as they seek to get back to a more normal life after COVID-19. Sanitiser demand, however, remains high.
Such trends highlight the importance of being agile to meet product trends and to carefully manage inventories.
For example, Sebastian says if a supplier gets stuck with multiple pallets of RAT kits, which can cost up to $35,000 per pallet, the business could run into trouble.
“If you’re investing too much into these types of products, it can really become a cash-flow issue.”
The ability to maintain high levels of certain stocks at its Ellerslie warehouse has given NZ Cleaning Supplies crucial inventory flexibility.
Agile and responsive
Although RapidClean has been performing well, Hughes says recent ANZ bank surveys of business and consumer confidence provide pause for thought.
The bank notes that consumer confidence in New Zealand’s economic outlook is lower than when COVID-19 first struck, crashing 16 points in February 2022 to 82 points, the lowest at which the index has been since the survey started in 2004. While business confidence gained slightly in March, it remains considerably lower than at the end of last year.
“A lot of that has been around the fact that tourism and hospitality, which are some of the traditional sectors in which a lot of RapidClean members operate, have taken a real hammering and who knows when the doors will open again,” Hughes says.
All the same, opportunities exist for smart operators.
On the back of a government program to provide lunches in schools for disadvantaged children, some RapidClean members have won business to supply packaging for the meals.
“We’re always looking for opportunities to be a good supplier in different markets.”
At NZ Cleaning Supplies, Sebastian has renewed his call for governments and businesses to support domestic manufacturers and suppliers, rather than blindly favouring multinational importers.
“We should try to manufacture everything within the country, if possible, rather than just being a ‘box mover’ of international products.”
Dr Whiteley is confident that demand for high-quality cleaning products and services will continue in New Zealand as COVID-19 comes to the end of its cycle.
The ongoing threat of superbugs will put pressure on manufacturers, suppliers and cleaning contractors to up the ante on cleaning and hygiene standards.
“Contracts will be written not around just how many bins you empty each week, or how many desks that get dusted and who vacuums the floors, but rather it will be whether the hygiene standard is better after you’ve cleaned it than before,” he says.
“There are a lot of processes where cleaners just smear the dirt from one side of a room to the other. Some of the superbugs love that stuff.”
Likewise, numerically based measurements of cleanliness will put cleaning chemicals and other consumables to the test.
“It won’t be enough just for a site to look good and smell clean,” Dr Whiteley says.
In such an environment, Whiteley will continue to spend a significant proportion of its profits on R&D to produce even better cleaning products that target threats such as biofilm, a network of dangerous bacteria that can cause infections in settings such as healthcare facilities.
“If you have an aged-care centre where hygiene is not being managed well, those people can die, Dr Whiteley says.
“This falls back on to us in the cleaning sector to say that we have more than a financial responsibility – there’s a civil responsibility to care for people who are vulnerable in our community.”
This article first appeared in the May issue of INCLEAN NZ magazine.
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